Daily Commentary

MarketMinder’s View: Credit rating agency Fitch recently reaffirmed its “A+” rating for French debt—the upper-middle tier of investment-grade bonds, implying “high credit quality” and low default risk. But, as the title suggests, the agency also warned La Republique risks a downgrade tied to rising deficit projections and “persistent political fragmentation.” Downgrade or not, we would take all of this with a grain of salt. As we have covered extensively before, credit ratings are backward-looking opinions—largely irrelevant for forward-looking stocks. Consider: French stocks are up over 9% since Fitch downgraded French debt last September (per FactSet). Yes, they have lagged European and global stocks over this stretch, perhaps due in part to the aforementioned political problems and related uncertainty. But Fitch’s decision was more a late-lagging confirmation of what French stocks already knew—and they moved on pretty quickly. On top of this, the article rehashes false fears around France’s debt-to-GDP and deficit forecasts—neither of which drives stocks. The former is an apples-to-shovels comparison while the latter relies on straight line math and factors well outside stocks’ 3 – 30-month window. In concert, these worries suggest sentiment toward France remains cool and that the wall of worry remains high.

MarketMinder’s View: With the UK’s Budget coming a couple days before Halloween, this piece suggests Chancellor of the Exchequer John Healey could turn to additional windfall taxes on oil companies and banks to finance the new government’s defense spending and cost-of-living commitments. As always, MarketMinder is nonpartisan, preferring no party or politician over another. But we generally hold that the more you tax something, the less you get of it. Oil and gas firms blame the extant energy windfall tax in part for diminishing investment in the North Sea, and higher bank levies could weigh on lending. But a critical detail: None of this is policy yet. These are still just trial balloons—policy ideas politicians purposefully leak to weigh voters’ (and markets’) reactions. We saw them from the UK Treasury in 2024 and 2025 and in the US earlier this year ahead of November’s midterms. These trial balloons tend to sap surprise power for stocks, teeing up a muted market reaction when (and if) said policies eventually pass and relief if they end up watered down or on the cutting room floor. We think all the talk today reduces the potential for negative surprise for stocks, as it did for past Budgets. For more on this topic, see last November’s commentary, “For Investors, Public Political Brainstorming Is Noise, Not News.”

MarketMinder’s View: Here is a look at how the weather phenomenon known as El Niño is creating winners and losers across the global economy. To be clear, we feel for those on the losing side of warmer oceanic conditions in the Pacific. But from a pure investing and economic angle, the negative speculation here is a bit overwrought. On the former, it is simple: Weather isn’t a market driver. Especially not a seasonal phenomenon like El Niño, which has been well documented for centuries. While it is impossible to forecast how this El Niño will play out (the weather is inherently unpredictable), extreme weather hasn’t proven to rack up the economic damage needed to push the global economy into recession and wallop stocks. Moreover, as the article acknowledges, El Niño’s implications aren’t all negative. Winners include insect protein producers and insurers via higher fish prices and fewer Atlantic hurricanes, respectively. The upshot is more of an economic wash than an outright collapse. El Niño’s effects may hit local and even regional economies, but the global fallout is limited. Again, we don’t dismiss that many are feeling El Niño’s negative effects. But anecdotal evidence doesn’t support the broader economic claims here, especially as positive global economic data continue pouring in. For more, see our July commentary, “Why El Niño Doesn’t Necessitate Portfolio Shifts.”